Governor Bill Ritter’s

FY 2010-11
2010 11 October
Budget Balancing Plan

October 22, 2010

1
 B l
Balancing
i B Budget
d t Sh
Shortfalls
tf ll

„ With this FY 2010-11 budget balancing plan, shortfalls totaling over $4.5
billion have been addressed over the past three fiscal years.
… A shortfall of $0.8 billion was addressed in FY 2008-09.
… A shortfall of $2.2 billion was addressed for FY 2009-10.
… A shortfall of $1.2 billion was addressed for FY 2010-11.
… An additional shortfall of about $59.7 million in FY 2010-11 was addressed through
a balancing
b l i announced d on A
August 23
23, 2010
2010.
… An additional shortfall of about $261.7 million in FY 2010-11 is now being
addressed through this balancing plan.
„ The plan being submitted totals $296.5
$296 5 million,
million which will result in the General Fund statutory reserve
being maintained at 2.51%. The $34.8 million in excess of the required 2.0% statutory reserve will roll
forward into FY 2011-12 thus addressing $34.8 million of the anticipated shortfall in that fiscal year.

Governor's Office of State Planning and

Budgeting 2
 Tough Choices

„ 97% of the FY 2010-11 General Fund appropriation is devoted to just five

areas of service:
… 45.6%, K-12 Education is the largest component of the General Fund budget
and was off limits when balancing in FY 2009
2009-10
10 due to a required 5% General
Fund increase.
… 17.7%, Health Care Policy and Financing provides services that are mostly
entitlement programs that have a counter-cyclical relationship with the economy.
When the economy goes down
down, Medicaid enrollments go up up.
… 9.2%, Human Services are provided to the state’s most vulnerable and highest-
risk populations such as those with developmental disabilities or mental illness,
juvenile delinquents, and children who are the victims of abuse and neglect.
… 15.2%, Corrections, Public Safety and Judicial provides public safety
services. Staffing levels that were reduced during the last recession have still
not been restored. Judicial staffing was increased pursuant to HB 07-1054.
… 9.3%, Higher Education is one of the last remaining areas of the budget where
there continues to be budgetary flexibility and where federal stimulus funds have
mitigated major reductions for our state’s colleges and universities.
Governor's Office of State Planning and
Budgeting 3
 Components of Balancing Plan

„ K-12 Education – Reduction of $219.5 million General Fund for K-12 Total Program. This
reduction will be offset with an increase of $63.2 million of federal American Recovery and
Reinvestment Act (ARRA). Additionally, the recently passed federal Education Jobs Fund
Program made $156.3 million available to Colorado school districts. While the state cannot direct
school
h l di
districts
t i t on hhow tto use th
the Ed
Education
ti JJobs
b ffunds,
d didistricts
t i t could
ld use th
the ffunds
d tto address
dd
or avoid staffing shortfalls due to the General Fund reduction. After accounting for the ARRA
funds and the Education Jobs funds, the net impact to school districts would be a reduction of
$292,666.
„ Higher Education – Increase of $63
$63.22 million General Fund offset with a $63
$63.2
2 million reduction
of federal ARRA. After these actions, the net impact to the higher education appropriation will be
zero.
The combined net impact of the K-12 and Higher Education actions will be a General Fund
reduction of $156.3
$156 3 million
million. See chart on following page regarding the flow of dollars in this
action.

Governor's Office of State Planning and

Budgeting 4
 Flow of K-12
K 12 and Higher Ed Funds
Included in this Balancing Plan
General $156.3M General Fund Budget
Fund Balancing

Federal
Higher $63.2M ARRA School $156.3M Ed Jobs
Education
Education Districts
Jobs Fund

* HR 1586 provided $10 billion from the Education Jobs Fund to help states avoid teacher layoffs. This action provides Colorado with an additional $156 million for local education authorities
via
i th
the primary
i education
d ti ffunding
di fformula
l ffor primary
i and
d secondary
d education.
d ti Th state
The t t is
i required
i d to
t pass the
th funds
f d directly
di tl tot the
th local
l l educational
d ti l agencies
i and d governors are nott
permitted to direct how a LEA uses the funds. The local educational agencies have sole discretion for the use of the funds, as long as they comply with the federal requirements for Ed Jobs.

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Budgeting 5
 Components of Balancing Plan

„ Local Government Severance Tax Fund – The August balancing plan included a transfer of
$5.0 million to the General Fund in addition to a restriction of $30.0 million. This plan transfers the
$30.0 million that had been restricted and increases it by $25.0 million resulting in a transfer of
$55.0 million over and above the $5.0 million transferred in August. Grants to communities
i
impacted
t dbby energy ddevelopment
l t are di
distributed
t ib t d ffrom thi
this ffund.
d During
D i ththe currentt year, about
b t
$16 million in grants have already been distributed and will not be recalled. After this transfer,
current revenue estimates indicate no additional grant funds will be available in the current fiscal
year. Should future severance tax forecasts change it may be necessary to change this
recommendation.
„ The Perpetual Base Account of the Severance Tax Trust Fund – Transfer of $10.0 million to
the General Fund for budget balancing in FY 2010-11. The transfer will decrease the amount of
funding available for loans to water users in FY 2010-11. It will leave the Colorado Water
Conservation Board with a balance of $21.0 million with which to make loans and grants in FY
2010 11 The
2010-11. Th Colorado
C l d Water
W t Conservation
C ti Board
B d is i still
till considering
id i options
ti regarding
di lloan
issuances in FY 2010-11 and 2011-12, but no loans will be canceled as a result of this transfer.
„ Delay Medicaid Fee-for-Service Payments – Reduce $55.1 million General Fund associated
with continuing the existing two-week delay for payments processed through the Department of
Health Care Policy and Financing’s
Financing s claims processing system,
system the Medicaid Management
Information System (MMIS), and extending the delay by one additional week in FY 2010-11 for a
total delay of three weeks.
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Budgeting 6
 Components of Balancing Plan

„ Delay Medicaid Managed Care Payments – Reduce $15.2 million General Fund associated with
delaying payments to Medicaid managed care providers for one month at the end of FY 2010-11.
„ Colorado Travel and Tourism Promotion – Transfer $2.5 million from the Travel and Tourism
Promotion Fund to the General Fund in FY 2010-11. This sum is the amount of existing fund
balance for which the Office of Economic Development and International Trade does not have
current or prior roll-forward spending authority. The transfer will not impact the anticipated funding
level for travel and tourism of $14,416,049 in the current fiscal year.
„ Higher Education Federal Mineral Lease Maintenance and Reserve Fund – Reduce the FY
2010 11 transfer amount to the General Fund that was submitted on August 23
2010-11 23, 2010
2010. OSPB had
requested a transfer of $9.4 million to the General Fund for budget balancing, but the September
2010 forecast required a reduction of $1.0 million for a transfer of $8.4 in FY 2010-11. This fund
was established, in part, to reduce the impact of budget cuts on higher education.
„ Local Government Permanent Fund – Reduce the FY 2010-11 transfer amount to the General
Fund submitted on August 23, 2010. OSPB had requested a transfer of $11.4 million to the
General Fund for budget balancing, but the September 2010 forecast required a reduction of $1.0
million for a transfer of $10.4 million in FY 2010-11. This fund was established to reduce the
impact of slowing severance revenues in energy impacted communities.

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Budgeting 7
 ARRA F
Funds
d ffor B
Budget
d tB Balancing
l i

SFSF SFSF
Fiscal Year FMAP Education Stabilization Government Services Total
F d
Fund F d
Fund

2008-09 $215,721,373 $150,676,055 $31760411 $398,157,839

2009-10 $331,409,119 $382,008,243 $96757419 $810,174,781

2010-11 $355,119,778 $89,194,099 $9846312 $454,160,189

Total $902,250,270 $621,878,397 $138,364,142 $1,662,492,809

OSPB estimates from the summer of 2010 and are not based on the November 1, 2010 budget request.
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Budgeting 8
 Impact of Recent Federal
Assistance to States
„ As is noted on page 8, Colorado is estimating that $355.1 million will be received in FY 2010-11
from the enhanced federal Medicaid match rate. Of this amount, $144.5 million was by Congress
in August. This Congressional action was reflected in our August 23, 2010 budget balancing plan.
„ As noted on page 4, Colorado is estimating that school districts will receive $156.3 million in FY
2010-11 from the Federal Education Jobs Fund Program approved in August 2010. The Governor
determined that this funding would be distributed to school districts according to the same
methodology as the Colorado School Finance formula.
„ Combined, these two recent actions brought $300.8 million of recent fiscal relief to the state of
Colorado and school districts
districts. If these actions had not been taken
taken, the state and school districts
would have had to address $300.8 million more in budget shortfalls than have already been
addressed. What options would have been considered if this funding had not been approved
by Congress?
… Elimination of up to approximately 6,000 teaching positions in local school districts.
… An additional reduction of $89.0 million from local colleges and universities.
… Closure of more state prisons.
… Closure of Motor Vehicle Offices.
… Reductions to safety net services for the elderly, children and disabled.

Governor's Office of State Planning and

Budgeting 9